For 13 million workers, fighting the boss just got harder

By Irina Ivanova

Updated on: December 18, 2017 / 9:22 AM
/ MoneyWatch

Bringing claims of harassment or other malfeasance against an employer just got a little harder because of a change in federal labor rules. The National Labor Relations Board last week reversed a two-year-old decision that made companies and franchisers jointly responsible for workers managed through temporary agencies and franchises.

There are about 8 million people in America who work for a franchise, according to the US Census Bureau. The system, where a large brand licenses out its name and other aspects of a business, exists in all sectors of the economy, but the best-known are food service places such as McDonald's, Jimmy John's and Dunkin' Donuts. Another 4.8 million workers are employed through temp or staffing agencies, filling jobs in offices, factories, warehouses and other facilities.

In 2015, the NLRB decided that, when an organization hires workers through a staffing agency or franchisee, both companies can be considered "joint employers." Known as the Browning-Ferris standard, this meant that companies that used temp or other contract workers could find themselves with the obligations of a traditional employer when it came to handling worker complaints or negotiating with a union.

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Since that decision, several states passed laws to roll back the rule, and business leaders have pressed Congress for a law that would undo it. But for labor activists, who argue that large corporations have been setting the terms of employment all along, this was a welcome move.

"Consider a common employment arrangement in which a staffing agency hires a worker and assigns her to work at another firm. The staffing agency determines some of the worker's terms of employment (such as her hiring and wages), but the other firm directs her daily tasks and sets her schedule and hours," Marni von Wilpert, of the left-leaning Economic Policy Institute, explained in a blog post.

That decision was a positive for workers. Last year, McDonald's (MCD) became the first corporation to settle a lawsuit brought by workers at a franchisee, paying $3.75 million to about 800 employees who said they were cheated of pay while working at McDonald's franchises.

In its decision on Thursday, the NLRB reversed itself, saying that a company couldn't be considered a joint employer if it only had indirectcontrol over someone's working conditions, or if it has direct control but hasn't used it.

That change amounts to a boon to industry, especially large franchises, which has argued that the previous standard was vague and confusing.

The NLRB's decision "helps create certainty for franchisors and franchisees in the near term and highlights the need for long-term certainty in this area," said Matt Haller, senior vice president of government relations and public affairs for the International Franchise Association, in a statement.

But labor activists say the ruling allows big chains to avoid responsibilities when workers are hurt on their watch.

"What I see a lot of times, in cases of discrimination, for instance, is you may see a sexual harassment situation where you contact the parent company and they don't care. They say, 'It's not our problem,'" said Donna Ballman, an employment lawyer based in Florida. "What we're going to see is these large companies taking a hands-off attitude and saying 'it's not my problem' for all kinds of legal violations."

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The board's 3-2 decision fell along party lines. NLRB members Marvin Kaplan and William Emanuel, both nominated by President Donald Trump over the summer, voted alongside Philip Miscimarra, the outgoing board chair. Mark Gaston Pearce and Lauren McFerran, Democratic appointees, dissented in the case.

The NLRB, created in 1935, is mandated to protect the right of workers' right to organize and to prevent labor abuses by employers. Senate majority leader Mitch McConnell, R-Ky., has said he wants the board to be less explicitly pro-worker, and has previously introduced bills to that effect.

Beyond workplace harassment, the NLRB decision also makes it harder for workers to address their work conditions, ask for higher pay or form unions. Instead of being able to address issues across thousands of stores that operate under one brand, workers would have to raise concerns piecemeal at each individual location, many of which are operated by small entrepreneurs with lesser financial resources than the corporate parent.

The NLRB's move on Thursday seems to fly in the face of that reasoning, but it won't necessarily stay that way forever. The NLRB could revisit the standard at a later date, Ballman said; a decision in a court have the same effect. Congress, too, could pass a law clarifying the employer-employee relationship.